The Mechanism

Institutionalized corruption has been the bane of good governance in most developing countries. Even in developed countries corruption masquerades as expensive lobbying, with quid pro quo for almost all favours done by the powers that be. Unfortunately, corruption is instinctively embedded in human psyche – the premise is that almost everyone has a price, like everything has a price, and provided that price is paid, that everyone is available to provide a service. It sounds obnoxious and bothersome to say the least, but it is a practical reality most of us have encountered in our lives. There is no denying it, it is very rare for a person not to have experienced or seen it.

When corruption is institutionalized in the system, like it is feeding upon itself in embedded circles, then we have a very serious and dangerous problem to handle and fix. When public money (basically taxpayers’ money) is siphoned off by government-owned companies through the well-oiled system of awarding contracts at inflated prices to chosen contractors, who then reward the politicians and ministers who appoint directors on the board of these companies via a money laundering scheme, then corruption is well entrenched. It is not possible to eradicate the scourge of corruption irrespective of change in governments or officials. The law enforcement becomes part of the system as it comes under the Justice Ministry, which is just another government machinery to ensure that the above-described system stays in place.

“The Mechanism” is a Netflix serial which just started running – it is about the systemic corruption in Brazil, which is still playing out in real life. You might have seen that the ex-President Lula da Silva has been arrested and sentenced to years in jail, and his successor Dilma Rousseff is also facing corruption charges. I have been seeing the serial for the past couple of weeks, and it has got my full attention. I can visualize how the same system would work out in other countries that I know of.

What surprised me in the serial is the passionate commitment of the law enforcement officers and their loyalty to each other as they fight the corrupt villains together sometimes, and on a disjointed basis on other times. It is funny to see how the lead officer fights off the prosecutor during a press conference. At the end of the day, it is all about human emotion, and how that plays out while the almost real story spins out of control. The Mechanism also shows how important it is to have an impartial judge who carefully evaluates the evidence before signing off the search and seizure or arrest warrants. When someone cannot be bought, then the story turns in favour of ultimate justice.

Many of us have experienced the most simple variety of corruption – like the official at the property registration office demanding a cut before registering the sale or purchase of property, or the driving license official asking for a price, etc., Many of us have only “read” about institutional corruption – how public funds that otherwise could be usefully deployed to pay for much needed infrastructure or citizen services, are tapped by unscrupulous public companies and politicians which keep developing nations poor for ever. This is a sad story playing out in most countries. There are only a very few lucky countries which do not have this plague afflicting their system of governance.

I was never that much interested in Brazil, but The Mechanism brought Brazil right front and centre – a fascinating country indeed. It is the 8th largest economy in the world with more than 207M population, and a GDP per capita of over USD 10K. It is the largest economy in South America and prior to 2012, it was one of the fastest growing economies in the world, meriting its inclusion in the McKinsey BRIC group of countries.

Large countries do have large problems, and Brazil has not been an exception.

Corruption has roiled the country out of shape over the past several years, damaging the presidencies of multiple presidents. It is always surprising to find that the pressure to maintain the status quo is just phenomenal – as we see in The Mechanism, the previous Attorney General (called the “wizard” in the serial) tries to negotiate a deal with the incumbent Attorney General on behalf of the 13 corrupt contractors who, he maintains, are crucial for the survival of the Brazilian economy! And, when that pressure builds up all the way to the President of the country (as is shown in the serial as well), then one can imagine the enormous stress that can be applied on honest law enforcement officials and judges.

The serial is not over, and I have not seen all the episodes. But is easy to figure out the impact of corruption in the Brazilian society, as the water utility company which comes to fix a broken pipe in the serial demonstrates the corrosive influence of systemic corruption by passing off the work to a small time contractor who will then feed back the bribe to the company officials.

I have not seen serials on corruption – this is probably the first one. The creator of the series has done an amazing job (his name is Jose Padilha), and the key actors have performed exceedingly well, though personal animosities do take an overarching role disturbing the main theme of the serial. But let me forgive that distraction and focus on the positives of the serial!

Cheers,

Vijay Srinivasan

08 April 2018

 

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Falling Markets

We saw that the major equity markets around the world suffered steep losses during the week which just ended.

There are always multiple reasons why the equity investors fret at times and start a major selling operation of their holdings. Mostly it is sentiment, sometimes emotions, but almost always there is a reason or many reasons why the market sell-off happens.

In the current scenario, the negative sentiment is driven by multiple factors afflicting the U.S. economy, aggravated by bad government policies which appear to keep shifting all the time under the wise administration of President Trump. To start with, there has been a series of exits of experienced people from the administration – the latest being General McMaster who was the National Seecurity Advisor to the President. He has been replaced by the rather hawkish hothead – John Bolton, who is likely to plunge the U.S. into another back-breaking war, either with Iran or North Korea.

So, you have a combination of the following factors:

• a huge deficit budget of USD 1.3T which has just been signed off by the President, necessary to keep the government running till end of September 2018, which has a massive allocation for the military (not all of that is necessary);
• a possible credit squeeze, with the Federal Reserve planning to raise the interest rates at least twice if not more times during this calendar year;
• a high dependency on China which buys most of the U.S. Treasury Bills;
• a looming trade war primarily with China, with the President planning to impose tariffs worth USD 50/60B on imports from China, and the already planned retaliation by China;
• a strong noose tightening around the President’s neck – the Russia investigation of Special Counsel Robert Mueller – Trump cannot fire Mueller as that would lead to unforeseen consequences, but he might still do it, plunging the U.S. into uncertainty;
• more potential exits from the Trump administration – Jeff Sessions is one clear possibility;
• sex scandals threatening Trump from a series of women – the courts are admitting the cases against the wishes of Trump and his lawyers;
• the clear possibility that Kim Jong Un might refuse to enter into talks with the U.S. if John Bolton is involved; North Korea termed Bolton as a “scum” and a “blood sucker” in 2003/04 and is unlikely to talk to him if Trump deputes him or brings him along to threaten Kim Jong Un, which will very likely happen;
• the Iran nuclear deal imbroglio; Trump might refuse to certify the continuance of the deal when it comes for his quarterly certification signature as required by the U.S. Congress, in which case Iran will be free to walk away from the deal, and that might lead to Bolton arguing his case to bomb all of Iran’s nuclear facilities;
• the continuing loss of elections to the Democratic Party as just happened in Pennsylvania – the potential loss of both the House and the Senate majority, which is not likely, but appears possible now;
• and, so on and so forth…………there are many such factors

So, the equity markets falling was expected by all and sundry. If I recollect, the U.S. market ran up by more than 6,500 points (DOW) in about 14 months from the time Trump took office, allowing him to tout the market gain as one of his signature achievements. Now out of this increase, 3,000 points are gone, and it is likely that the sell off will continue into next week.

A government that is so critical for world peace and stability cannot be tottering every day. One has to just see CNN News and the U.S. Talk Shows by major news organizations, to get the full import of what is going on in Washington D.C. The Trump administration has become a laughing stock, even within the U.S.

The only silver lining is that Trump is the first U.S. President who has succeeded in pushing North Korea to the negotiating table (mostly by harsh tweets from Trump!), though both Koreas claim that they decided to play the Olympic game together and cool off the rhetoric. The other achievement of Trump is that he is the first U.S. President to stand up to China without any fear of repercussions and challenge them to a trade war.

While these are great to see and hear about, we have to recognize that Trump has still not won any battle with either one of these countries. He could not even win the Border Wall case against Mexico, which refused to foot the bill. It is going to be very tough for the U.S. to negotiate when Trump has surrounded himself with foreign policy and military hawks such as Mike Pompeo (the new Secretary of State, yet to be confirmed by the Congress), John Bolton (the new National Security Advisor who does not need Congress confirmation), Gina Haspel (the new CIA Director nominee who needs to be confirmed by the Congress), and the perennial lady hawk Nikki Haley who is the U.S. Ambassador to the U.N. A war is surely looming with such hot heads around the President, who himself is a strong hot head who will not take a slight from anyone, or advice from anyone. All the major departures have happened apparently due to the fact that the concerned person begged to differ from the views of the President.

So, here we are, with markets having fallen all around the world, including India’s SENSEX. We are entering an uncertain phase in world history and diplomatic relationships. Everything can come off unhinged. No relationship is going to remain sacred. Continuous drama at the White House is going to rock the markets on a daily basis. The markets can no longer afford to do their own business disconnected from political and economic realities.

So, we are all in for a rocky ride, folks.

Enjoy the ride however.

Cheers,

Vijay Srinivasan

24th March 2018

The most expensive city

According to the Economist Intelligence Unit’s (EIU) Worldwide Cost of Living Survey 2018, Singapore has been ranked as #1 most expensive city in the world. If New York’s cost of living index is taken as 100, Singapore works out to be 116, topping the list. Paris and Zurich are at 112, and Hong Kong is at 111. Seoul is at 106 and Sydney at 102, amongst Asian cities.

According to the EIU Survey, a bottle of wine (my favourite topic!) costs USD 23.68 on an average in Singapore, while it costs only USD 11.90 in Paris, the second most expensive city in the world. There are many things which are more expensive in Singapore than in other countries, like clothes and cars. Certain things are fine to be more expensive, as land-strapped Singapore needs to control the population of cars and road usage aggressively. Clothes can surely be cheaper – it makes no sense to buy branded clothes in Singapore when the same brand costs less than half in the U.S. for instance. But then not everyone travels, so locals look for heavy discounts and bargains; sometimes the same brand is made available at half the big store prices, via a third party in an industrial estate outlet (akin to the outlet malls in the U.S., but the ones in Singapore are just single makeshift places in a very cheap location and exist only for a couple of weekends). Since Singapore needs to import almost everything, prices tend to be higher, but the extent of price increase in the hands of the consumers is sometimes not acceptable, but we have to carry on with our lives in any case and need to buy at least the essentials.

The tag of the “most expensive city” in the world is unpalatable to most locals, as that designation just tends to increase the costs further. Expats who come to work in Singapore get increasingly higher salaries based on the EIU’s Cost of Living Index for Singapore (it is a popular survey), and that action increases the cost of living further, as the expats are just willing to pay more for everything. This in turn, increases the cost for everyone living in Singapore.

The demand for quality accommodation has pushed up market prices of housing in Singapore over the past year or so. All in all, Singapore is surely an expensive place to live, but is also probably as safe as Tokyo, which is widely regarded as the safest city in all of Asia. Rule of law and enforcement of law dominate the city state, keeping most people honest, whether they are locals or foreigners.

Coming back to the issue of cost of living, I “feel” that Tokyo is much more expensive, especially when I am having lunch or drinking coffee. I get the same feeling in Hong Kong. Clothes seem to be expensive everywhere, except in Vietnam and India. So, the major aspects afflicting Singapore with regard to cost of living pertain to things on which nothing much can be done – personal transportation when it involves owning a car, and accommodation. Wines and cigarettes will continue to be expensive, so the only way is to curb their usage. I believe hawker centre food from ‘A’ category outlets still remain affordable in Singapore – it has gone up over the past decade, but still manageable. A good quality plate of Chicken Rice can be had for around S$ 5.50 and a Bento Box of Teriyaki Chicken can be had for S$ 7.00 in most hawker centres. I am afraid when these prices will double making them unaffordable for most people. Foreigners tend to spend more than S$ 10.00 to 15.00 for daily lunches, but locals are sensitive to the S$ 5.00 mark. I see this everyday. It is sometimes funny to notice that the locals would not mind spending S$ 2.00 or more for a bus ride to their favourite hawker centre, as food plays a central role for them (like it is for most of us). I consider myself as a “local” for all practical purposes, so I tend to adopt similar benchmarks as these help when you are with Singaporeans going for a lunch session.

Cars are expensive, and enough has been written about cars in Singapore, so I am not spending any more time on this topic. I see some people shifting to App-based taxi usage away from their personal cars and other modes of transportation, and this is increasing the traffic density in an already crowded city. However, traffic flows along almost smoothly due to a very effective implementation of traffic rules. These are getting affected a bit by the big number of cycle riders who are using the same road space in a city where the average car speeds are in excess of 60 KMPH. Then there are also these personal mobility devices – like e-scooters, and you have the most infamous bike riders who twist their way between two high-speed car lanes at tremendous speeds, which will not be an acceptable way to drive in most developed countries.

Cost of credit is cheaper in Singapore than in most other developed nations, so that could be a positive. Food, as I stated above, for common daily lunches/dinners are not that expensive, but beer and wine are very expensive. Electronics items are reasonably priced, though not as cheap as in Hong Kong.

Hopefully, Paris will overtake Singapore in the next EIU Survey – most people recall the #1, but not the #2 and #3 ranks, so it is better for Singapore to slip to #2 or #3 rank soon.

Cheers,

Vijay Srinivasan

18th March 2018

 

The Culture of Materialism

The premise of this post has been to establish the link between materialistic greed of (certain) people and corruption and overall destruction of value for citizens who lead normal lives. I went for an event today, and this topic was discussed among a set of trusted friends who had very different views. As an author, I am supposed to state my views in a non-diluted manner, while accepting criticism or praise in equal measure, which is exactly what I am going to do now – I have not changed any of my views in this final version which is getting published this evening (Saturday evening in Singapore), though I did think about some of the alternate views expressed by friends today on this topic.

Here is my view in a few bullets (this is not the normal way I write, but I thought it would be good to highlight):

• Countries which unabashedly focused on the material well-being of their citizens in the 1970s and 80s, paved the way for economic growth to be the dominant factor in their countries’ vision – examples would be South Korea, Taiwan, Hong Kong, and Singapore – the four “Tiger Economies” of Asia. This meant that citizens were led to believe on the economic vision of their leaders, in turn, leading to rapid growth over the past 3 to 4 decades, rapidly enhancing the GDP per capita of these nations, and focusing on generating material wealth for the citizens. This has already happened – Singapore now is the 4th richest country in the world in just one generation! There are pros and cons, but one cannot argue with the fact that economic progress has been clearly accomplished.
• Countries which focused on political philosophies and social development in an Utopian manner did not progress fast due to the debilitating bureaucracies that these countries established, leading to slow progress and corruption as the main driver for faster movement of business. There are many examples of such nations, mostly democracies and some dictatorships, but I am not going to name them. Established mechanisms of corruption and nepotism led to stealing of wealth from ordinary citizens to line the pockets of politicians and bureaucrats, and the wealth generation was isolated in few family run businesses. Not surprising, however.
• Over the past decade or so, these large countries have seen what the smaller countries have accomplished, and are trying to adopt some of the policies though in a much belated and haphazard manner. However, the institutionalized corruption continues irrespective of change in governments as the essence of bureaucracy has stayed the same. This implied focus on materialistic economic growth will take a very long time to trickle down to ordinary citizens, and will again benefit few individuals and families, as we are seeing. Tax payers’ money is being stolen brazenly to benefit these folks.
• So, the derivation is that the focus on materialistic wealth generation is not going to work for larger countries since institutional changes and policy frameworks have not changed for the better. This would mean that corruption would accelerate and lead to larger financial scandals, while ordinary citizens would see probably a lower impact of routine corruption due to e-governance initiatives (the only major benefit, yet to be realized however).

In a nutshell, the culture of materialism will lead to skewed economic growth for larger countries, benefiting the same businessmen who benefited in the past. Lifting millions of people out of poverty towards a USD 5,000 income per capita is not a simple challenge – it cannot be compared with the easier task that the Tiger economies had with their singular focus on trade. So, there is going to be very hard time befalling on millions of honest working folks and farmers, who would be held subservient to the governments by paying more taxes and more fees to obtain banking, insurance, and other services.

This is indeed a sad situation. Expecting millions of ordinary folks to understand economic and digital principles is foolhardy, as the base of education and healthcare has not been laid out over the past many decades. When ordinary people see how the rich people fleece money in an illegal manner from the same banks and governmental institutions, what ideas would they get? When these powerfully connected and rich people escape without so much as an indictment, what message does that send to others? While a French revolution is not in the offing, ordinary people would have to take some kind of action within their control, right?

Fascinating, but also saddening. Think about the whole complex situation developing, and you will see that WhatsApp messages and Fake News do not tell the entire story. The deeply maligned people are going to scot free, and no one can do anything. This is the result of all our democracies and institutions in action. Even the U.S. is not spared, as you see in daily news, day in and day out.

The culture of materialism is destructive. It will lead to serious social divisions in society which cannot be fixed in one generation.

Think, probably with a drink like what I am doing now!

Cheers,

Vijay Srinivasan

17th February 2018

Gini Coefficient

I am not going to explain what exactly is the Gini Coefficient or how it is computed for a country or society.

Suffice it to state that the Gini Coefficient is a good measure of income inequality – how wealth is distributed in a country. A perfectly income-equal country (where everyone earn the same amount of income) has a Gini Coefficient of 0, and a completely unequal wealth distribution leads to a Gini Coefficient of 1 (wherein one person has all the income, and the rest have none at all).

There is, of course, no country in the world with a Gini Coefficient of 0 or 1. The dispersion lies somewhere between these two figures, but the best “equal income” countries have a Gini Coefficient below 0.5. It is not practical to expect a figure better than that (like a 0.2 or 0.3) in a largely capitalistic world that we live in. Examples of such countries include South Korea, Canada, and many Western European countires. The Gini Coefficient has been deteriorating over the decades, as concentration of wealth in the hands of few people increases, as we have seen in many countries.

Governments are severely handicapped when it comes to tackling income inequality in their respective countries. Economic and taxation policies do not curtail the increase in the concentration of wealth. Many governments allow fixed capital formation in their countries with little tax impact, in order to attract investments and wealthy folks to their countries. As societies become prosperous in developed nations (in Asia that would include Hong Kong, South Korea, Singapore), the desire for further wealth accumulation increases in an unfettered manner based on past successes. Real estate prices go up in an uncontrolled manner, leading to a societal segmentation which segregates society into multiple fragments, and engender a more unequal income to be the cause of undesirable thinking in the disadvantaged populace. An “entry” price is eventually established for each such segment of the society, and the wealthier sections of the society become distanced from the so-called proletariat, even in advanced countries. This kind of “pricing” manifests itself in multiple ways – more BMWs, Jaguars, Bentleys, Ferraris, Lamborghinis on the roads is a good example; the other example is the inherent price fixation in real estate for exclusive high-end zones which precludes consideration by even the “above-average” dual-income couples who aspire to move into a better accommodation in such zones. General cost of living increases, and economic fundamentals adjust to serve the needs of the well-heeled. Gradually, the segmentation sets in firmly, and several enclaves form to cater to the respective segments, leading to even more dispersion.

While many of us have heard about the Gini Coefficient not so frequently, it is a commonly used economic term which concerns global multilateral economic and financial institutions. The global concern about unequal wealth distribution and concentration of wealth in the hands of few oligarchs is well placed and requires urgent tackling. Socially progressive governments in countries such as Switzerland are actively and very seriously considering various policy actions in this regard.

The problem with the fast developing countries such as China and India is more acute as the embedded inefficiencies in these countries allow for faster wealth accumulation in fewer individuals due to nepotism and favouritism, and other factors. Wealth created by family-run conglomerates far exceeds that by public sector corporations (or largely state-owned enterprises, which are publicly listed in the bourses). While it is commendable that the private sector wealth creation and capital formation is driving the business in India, it is also responsible for increased income inequality in a country with 1.25B people.

There are no easy answers for solving this rather intractable problem, I will let you think about potential solutions. In the meanwhile, I am returning to my usual weekend glass or red wine, while thinking about the solutions. What can we all do to reduce such inequality? Such thinking is even more important and relevant in wealthier countries such as Singapore, wherein the folks who earn far below the per capita income are very disadvantaged to sustain themselves in a fast-moving, economically-driven society.

Have a good weekend folks, and please think.

Cheers,

Vijay Srinivasan

10th February 2018

The inevitable rise of the assertive hegemon

It is inevitable, isn’t it?

I am referring to the unstoppable rise of China as the new pivot in international relations, strongly positioning itself as a counter to U.S. interests in Asia-Pacific region. There is no competitor to China as such, with even Russia and Turkey vigourously supporting the rise of China as a strategic counterweight to the U.S. (even the U.K., France, and Germany seem to be drifting away from U.S. positions as witnessed recently in the Palestine vote in the U.N. General Assembly).

While no country would take an opposing view to China in global forums, given its economic and military might, a few countries are thinking aloud about the potential ramifications of what they consider as “influence-peddling” by China to gain global power, by lending billions of dollars to poor countries hungry for infrastructure investments. Thousands of Chinese workers have been deployed in scores of countries around Asia and Africa, with their visible presence communicating a sense of beholdenness on the part of the local populations who have to pay back the loans eventually to China, failing which China would demand a stronger involvement in more government and private sector projects in those countries, thereby making certain countries as its vassals. An extreme observation, but nevertheless likely to happen in the next 10 to 20 years, as part of China’s inevitable rise towards the #1 position in economic power. It is estimated that by 2032, China will match the U.S. in terms of GDP size.

Now, who are these few countries with doubts about China’s rise and influence-peddling? These are Japan, Australia, the European Union as a collective, and of course, India. For instance, the EU and India have raised objections to China’s OBOR (One Belt, One Road) initiative, which is mostly an economic exercise to spread China’s influence over 65 countries with USD 124B investment via loans which will eventually make most of those countries forever indebted to China. There is no transparency in the way China has promoted the OBOR initiative, which is mostly President Xi Jinping’s vision without a “hard” blueprint of planning and execution. It is touted as the world’s largest ever infrastructure investment, many times bigger than the U.S. Marshall Plan which was implemented in the aftermath of the Second World War. China will try to spread its political and military influence over many of these “poorer” countries, such as what it has been doing in Pakistan and Sri Lanka. It will “buy” entire sea ports or towns and develop these as its own enclaves in those countries. Economic dominance will eventually impoverish these countries.

A lot of thought is required before nations can commit to OBOR. They have to seriously question China’s intentions, which cannot just be global trade and economic growth. There is a cost to everything, and nations have to understand the overall plan and their role in it. Further, all procurement cannot go only to China companies, there must be fair and transparent bidding processes. Land grabbing cannot be allowed in return for money, and human rights have to be respected (not in the way China does these things, however). There cannot be institutionalized corruption as part of the OBOR rollout in countries with weaker governance or authoritarian rulers. What is touted as a global initiative and vision, need to have global governance and a strong underlying framework, and cannot just be controlled entirely by one country (China).

The EU is likely to demand all of the above and more – it would like to have a say if China wishes to extend the OBOR initiative deep into the European heartland. We have seen that the EU is more balanced than the U.S. (or even the U.K.) when it comes to trade matters and human rights, and may be it will become the last bastion for fairness in all global matters of critical importance like this initiative.

I would like to complement President Xi Jinping for his vision of OBOR. It might become a much needed investment plan for most of the world in the coming decades. It might further China’s strategic interests and enhance its geopolitical influence against the U.S. It might even make China a well-accepted “partner” in many of the countries who are in the process of signing up for the OBOR program. All good, but the policy planners in these countries should carefully analyze the cost-benefits of participation in OBOR and advise their governments to seek responses from China in an appropriate manner, conducive to eventual participation.

My guess is that even India will eventually consider participation in OBOR, if its concerns are appropriately addressed by China. More importantly, China has the continuing habit of trying to “block” the world’s largest democracy from the Nuclear Suppliers’ Group and acting against Pakistan’s terrorists in the U.N. Security Council – these things do not go down well in India for sure, and repeated needling at border locations like the recent skirmish at Doklam is not helpful at all. If China wants to defeat India economically, it needs to first understand that it has already achieved that objective couple of decades ago. If China wants to defeat India militarily, that goal has also been achieved 55 years ago (though that may not be possible again). However, if China wishes to “encircle” India in a strategic manner and constrict it from growth and multilateral participation, then India will retort by intensifying its strong strategic partnership with the U.S. and Japan. It will also bring in Australia and Israel into the equation. India has the advantage of “soft” power which China lacks. India is mostly trusted around the world and at the U.N., while China suffers from a strategic distrust about its territorial ambitions as evidenced in Asia by its claims on the South China Sea.

So, where are we? Where is the world? I mean, on the OBOR program? A lot of questions need to be clarified before it can make a big impact on the world.

I wish President Xi Jinping all the best in OBOR acceptance and rollout, but he better take actions to smoothen the rollout – otherwise it will be consigned to history as a program which was conceived well as a vision, but did not have the essential elements in place and the strategic concerns appropriately addressed.

Cheers,

Vijay Srinivasan

14th January 2018

Language Emotions and Economic Loss

I came across a LinkedIn post and discussion thread today about Tamil vs Hindi (for people who do not know, both are Indian languages).

The original post was by a Chennai-based IT recruiter who complained that North Indians assume that he speaks Hindi when he calls them up, instead of responding to his English queries in English. He even goes on to mention that he teases the potential candidates by occasionally speaking in Tamil!

There were more than 10,000 comments by the time I came across this post, and thousands of “Like” (LinkedIn should also provide an easy button for “Dislike”).

Haven’t we heard this kind of topic before? Of course, we have, especially in Tamil Nadu.

Tamil Nadu and Tamilians apparently have not yet got the 1960’s imbroglio with the Central (Federal) Government on the then hot topic of imposition of Hindi on all States of India, against the Constitution of India and the regional peoples’ will, out of their heads even after 50 years. They are very emotional whenever the topic comes up.

Hindi is sparsely spoken in Tamil Nadu even today, though there are many Tamilians in Tamil Nadu who can speak Hindi rather well. It is not an accepted form of communication, however. Tamilians prefer English, even to talk to other Tamilians. Such is the impact of those old days when Tamil Nadu erupted in violence against Hindi. That misstep also led to the successful emergence of the Dravidian Political Parties of Tamil Nadu, which have been feuding even amongst themselves ever since. The result has been that the national political discourse and national political parties have been locked out of Tamil Nadu for all these past 5 decades.

The bad thing which came out of this anti-Hindi feeling has largely been detrimental to the overall economic interests of the State and its people, though many will argue (even now) that it was the best thing that could have happened for Tamil Nadu (apart from reduced plan allocations and constant challenges, I don’t know what we gained – if someone can elaborate, I would be more than happy to listen without a murmur). In the Sixties and Seventies, when Tamilians educated in Tamil Nadu purely in Tamil and English travelled to Delhi or Mumbai or Calcutta, they were at a big disadvantage. Those days (and even now), the Northern and Western regions of India had the biggest economic investments (both by governments and private sector), and offered more economic opportunities to job seekers. While English was the business language, more often than not it was not the spoken language in the office – it was almost always Hindi.

Who lost out?

Tamilians and Tamil Nadu. India is a country with more than 28 official languages and over 200 dialects. But, 70% of the populations (that is 900M as of now!) speak Hindi in almost a native fashion, or they learn the language from primary school onwards. Another 10% of the population (that is, another 130M people!) understand Hindi well, and would respond in Hindi if spoken to in Hindi.

So, a Billion people can operate in Hindi.

How about Tamil Nadu? It has 68M people only, just 5% of India’s population.

While I am not saying it is compulsory for everyone in the country to learn Hindi or speak Hindi, look at the advantages which I lacked as a non-Hindi speaker. One’s acceptance is higher at business offices, in government offices, in industrial environments and surely in society. Further, one would not need English sub-titles while watching Hindi movies! I survived with extremely half-baked and poor Hindi, and had to mostly depend on others to get my way through. I got into several tricky situations because I insisted on speaking only in English (you cannot blame me, apart from Tamil, English was the only other language that I know!).

I suffered quite a bit during my sojourn in Mumbai for some six years. I always felt left out, and my rather late attempts to learn Hindi did not work out as I just could not recall the right word at the right time. If only I had had the opportunity to learn Hindi even as my third language in my primary school, I would not have had any problems.

At the end of the day, it is the business and social acceptance across the country, notwithstanding any perceived language or cultural supremacy. Tamil is rarely spoken outside of Tamil Nadu in India – except in Tamil communities spread around the country which also speak Hindi fluently as they have settled in the so-called Hindi heartland due to economic or job necessities.

Why take up a fight against Hindi and waste precious time now? What is it going to produce in terms of benefits to Tamilians?

The world is moving fast, and India is moving very fast. Tamil Nadu should worry more about keeping its #3 rank in the State-wise rankings of GDP, it is in a good position to overtake Uttar Pradesh which has three times its population. Let us focus on bread and economics, and jobs and wealth creation for Tamil Nadu. That is a more important fight (in a positive manner, competing with other States of India) than spending an inordinate amount of time on language issues. If Tamilians wish to proceed and establish strong working relationships with Northern and Western regions of India, I would say learning Hindi is a good place to start – a positive thing to progress economically, rather than a negative thing which will impact Tamil. Tamil will never be impacted, it is a language which has stood the test of time over 30 centuries or even more.

Let us make language-based fights and issues a thing of the past, and focus on what is best for our people.

Cheeers,

Vijay Srinivasan

29th November 2017

Great Truths

1. In my many years I have come to a conclusion that one useless man is a shame, two is a law firm and three or more is a congress.

— John Adams

2. If you don’t read the newspaper you are uninformed, if you do read the newspaper you are misinformed.

— Mark Twain 

3. Suppose you were an idiot. And suppose you were a member of Congress. But then I repeat myself.

— Mark Twain

4. I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.

— Winston Churchill 

5. A government which robs Peter to pay Paul can always depend on the support of Paul.

— George Bernard Shaw

6. A liberal is someone who feels a great debt to his fellow man, which debt he proposes to payoff with your money.

— G. Gordon Liddy 

7. Democracy must be something more than two wolves and a sheep voting on what to have for dinner.

— James Bovard, Civil Libertarian (1994)

8. Foreign aid might be defined as a transfer of money from poor people in rich countries to rich people in poor countries.

— Douglas Casey, Classmate of Bill Clinton at Georgetown University 

9. Giving money and power to government is like giving whiskey and car keys to teenage boys.

— P.J. O’Rourke, Civil Libertarian

10. Government is the great fiction, through which everybody endeavors to live at the expense of everybody else. 

— Frederic Bastiat, French economist (1801-1850)

11. Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.

— Ronald Reagan(1986) 

12. I don’t make jokes. I just watch the government and report the facts.

— Will Rogers

13. If you think health care is expensive now, wait until you see what it costs when it’s free!

— P.J. O’Rourke 

14. In general, the art of government consists of taking as much money as possible from one party of the citizens to give to the other.

— Voltaire(1764)

15. Just because you do not take an interest in politics doesn’t mean politics won’t take an interest in you!

— Pericles (430B.C.) 

16. No man’s life, liberty, or property is safe while the legislature is in session.

— Mark Twain (1866)

17. Talk is cheap…except when Congress does it.

–Anonymous 

18. The government is like a baby’s alimentary canal, with a happy appetite at one end and no responsibility at the other.

— Ronald Reagan

19. The inherent vice of capitalism is the unequal sharing of the blessings. The inherent blessing of socialism is the equal sharing of misery.

— Winston Churchill 

20. The only difference between a tax man and a taxidermist is that the taxidermist leaves the skin.

— Mark Twain

21. The ultimate result of shielding men from the effects of folly is to fill the world with fools.

— Herbert Spencer, English Philosopher (1820-1903) 

22. There is no distinctly Native American criminal class…save Congress.

— Mark Twain

23. What this country needs are more unemployed politicians.

— Edward Langley, Artist (1928-1995) 

24. A government big enough to give you everything you want, is strong enough to take everything you have.

— Thomas Jefferson

25. We hang the petty thieves and appoint the great ones to public office.

— Aesop

FIVE BEST SENTENCES

1. You cannot legislate the poor into prosperity, by legislating the wealth out of prosperity.

2.What one person receives without working for…another person must work for without receiving.

3. The government cannot give to anybody anything that the government does not first take from somebody else. 

4. You cannot multiply wealth by dividing it.

5. When half of the people get the idea that they do not have to work, because the other half is going to take care of them, and when the other half gets the idea that it does no good to work, because somebody else is going to get what they work for, that is the beginning of the end of any nation!

I think there are some good truths in the above sentences. It is funny that many of these truths are in play today in nations big and small. I thought this is a good education for my blog readers. Enjoy but also think about these truths. Aren’t these relevant even today?

Cheers,

Vijay Srinivasan

16th September 2017

 

The India Experience……..continues…….

I spent the past few days in Chennai, the Capital of Tamil Nadu, visiting relatives and finishing off some personal work which was waiting for my visit for the past 4 months.

Every time I visit India, my perception of the environment has kept going up – I mean, increasingly positive. The improvements that I see all around should have come about couple of decades ago, keeping in tune with global enhancement to living conditions. But India faltered on its way to economic growth, led by ineffective leaders who were always subject to political pressures and vagaries, and who made decisions not always keeping the welfare of the country at heart.

However, notwithstanding the huge delays which have cost dearly, finally things are shaping up. I am not going to be positive about most things, however. In a very large country like India, it is very tough and almost impossible to get every section of the society aligned with economic growth imperatives and the sacrifices that are sometimes necessary to achieve equitable growth for all. There are people who are always against the central government and its initiatives. There are state governments not ruled by the same party which rules in the centre (federal). There are religious factions, there are minorities and then there is the “silent” majority who do not care about anything.

With all these challenges, India is moving fast forward, which is a rather surprising development over the past year or so. It will take considerable time, but it is not inconceivable for India to reach a 9 to 10% GDP growth rate, and a per capita income of USD 3,000 in the next 5 years, which should lift the size of the GDP to more than twice what it is today. It is also entirely possible (given the trajectory and assuming minimal disruptions) to achieve a per capita income of USD 5,000 in about 10 years’ time, which would be roughly three times the size of the economy today.

Well, good to read. On the ground, things move slowly however. Corrupt practices continue, albeit with reduced intensity. I pick up feedback from cab and auto rickshaw drivers, who are rather articulate and voluble when it comes to criticizing everything around us. I also collect inputs from folks that I meet, because invariably the talk turns towards the ineffectiveness of state governments and economic growth, etc.,

One thing which worries me is that what you hear about the English capability of Indians is actually not true. Most people are more comfortable in their mother tongue or in Hindi, the de facto national language which 70% of India speaks and understands. When I called a central government agency in New Delhi which is responsible for the national bio-metric ID cards, and chose the option to receive instructions in English and to speak with someone in English, I could not get the right person despite multiple attempts. I was able to get only Hindi speakers, who were baffled that I could not converse in Hindi, and struggled to understand what I was trying to say. It was incorrigible that the senior management of that agency has not addressed the issue, as everything in Central Government in New Delhi (and elsewhere in the country) is supposed to deal with all parts of the country, not just with Hindi speakers. Further, I tested the basic English language of OLA and UBER drivers in Chennai, and they consistently demonstrated lack of grasp of basic English communication.

So, what are we talking?!!!

It is not adequate for just the IT workers and Financial Industry workers to speak English. India needs to do something urgently to rapidly enhance English literacy. The most popular language in China today is English! Is it surprising? No. China has repeatedly demonstrated that if it sets its mind and heart to achieving something, it will achieve that, come no matter what. India does not follow this tenacity in thinking to achieve and then achieving the target with heart and mind.

Another parameter that I use to measure improvement is the ability of the economy to maintain capital assets to ensure maximum utilization and productivity of the asset. India has repeatedly failed to maintain its assets. Simple examples include MIG fighter jets (“flying coffins” as these are called), roads, power plants, water supply, railway stations and rail tracks, airports (improving finally), and infrastructure in general. Faulty lifts (elevators) and escalators abound. Attention to detail is completely lacking. Maintenance discipline which is an essential and critical component of economic productivity does not exist. How then can India compete with China?

In a large metro city like Chennai, with a population of 8M (50% more than Singapore), the upkeep of public facilities and roads are found to be seriously in disarray. I dread the upcoming monsoon season when the number of potholes in roads will multiply rapidly. It is apparent that public money is not being spent wisely in the interest of the public. Many arterial roads do not have pavements, or have pavements which are occupied by hawkers. The city municipal corporation does not seem to be taking strict action on violators. All legislators are afraid of voter backlash, but they view the voters in pockets. The silent majority goes without a say.

I can go on and on, but the key point that I observed is that people are optimistic and the general economic environment is improving (notwithstanding President Trump).

I hope that one day, not in the too distant future, at least some Indian cities will reach the status of global cities which attract talent from around the world.

The Indian story continues……….

Cheers,

Vijay Srinivasan

13th August 2017

 

 

India needs Free Internet

More than any other country on this planet, I would say that India needs free access to the internet to help it leapfrog to the next stage of its already large economy (the Indian GDP just surpassed that of the U.K.). In order to sustain its economic growth, remove system inefficiencies, open up new opportunities for entrepreneurs and alleviate poverty levels, India needs to subsidize access to the internet for citizens earning less than USD 10 per day.

That figure is a mind-boggling 500M people in my estimate, mostly based in rural towns, and villages. Even large cities have huge populations of people with no access to electricity, or even potable water. Given this situation, is it not laughable that I am suggesting internet as a free (or almost free) utility for the people to use ?

No, it is not a matter to be sniffed at. Given that tablets are now available at less than USD 50 (though not great looking), access to the internet utility becomes the major constraint for those masses of people who are at the fringe of the Indian economy which is still slated to grow @ 7.5% or more this year. The key enabler for these people is going to be knowledge and application of knowledge to their vocations and school learning. And, how is India going to deliver knowledge and actionable learning to the masses when its educational infrastructure is so weak ? How is India going to develop its intellectual capabilities beyond the IITs ? There are many questions but it is unquestionable that people provided with opportunities at the right times in their lives make it to a successful life later in their lives. Opportunity is critical and the Indian economy would not be in a position to deliver opportunities to the roughly 10M people coming into its workforce every year, most of them waiting for a job. That is close to 1M people every month!

Facebook and Google are opening up the airwaves in India by offering WiFi access in railway stations and other public places. While their goals are not entirely philanthropic, such initiatives by private corporations have to be commended when the national resources are tight to deploy access throughout the rural areas of India. I believe that India stands to benefit in a huge manner when all its villages and rural population are connected via satellite-based internet. Already 400M Indians are connected to the internet via their mobile phones.

India is not only a huge consumer market which is becoming more knowledgeable about the products the people wish to consume. It is also a melting pot for all kinds of experimentation that companies would like to pursue in the interest of testing their offerings. India is also an entrepreneurial nation of youngsters rushing to launch their new ideas or adaptation of ideas which have worked elsewhere. Given that the government is pushing the idea of a “Digital India”, it is not surprising that the population is warming up quickly towards the concept of all time and real time connectivity to test ideas, consume products, evaluate anything and everything. This is nothing short of a revolution in the making.

The good thing about India is that there is space for everyone. With its English-speaking workforce and modern orientation, India will become the third largest economy of the world by 2030, if not by 2025. It is critical that India offers opportunities to its aspiring people via the concept of free internet. Such an offering can even be positioned as free for 3 years, followed by USD 1 per month thereafter, for segments of the population which has an annual per capita income of USD 2,000 or less. For people earning above this figure upto a cap of USD 5,000 per capita, the rate could be fixed at USD 3 per month. People outside this cap would have to pay the commercial price. Such a subsidy scheme would go a long way in facilitating internet access to the teeming millions of Indians, transforming the country towards a Digital India.

I do hope this happens for the benefit of all Indians.

Cheers,

Vijay Srinivasan

11th June 2017